Investing in Townhouses?
- Thread starter youngm
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I appreciate you re-posting the info Rixter. I have 2 properties (townhouse and villa) and chose those over a house for most of your reasons plus a few others.
We bought relatively new properties but the one thing I noticed when looking for units was how rundown some look after 20-30 years or so. And in the case of age, it would seem easier with a house to do a quick reno and you're back in business with a newish looking property. But I often wonder about the pitfalls of choosing units as time goes on given the huge endeavor of ongoing maintenance for a large number of units.
Do you think there is some point at which you should sell?.for eg. once maintenance starts getting very expensive for the entire complex. Or do you think to just keep them until they die and keep taking the rent?
I would be interested in your thoughts
We bought relatively new properties but the one thing I noticed when looking for units was how rundown some look after 20-30 years or so. And in the case of age, it would seem easier with a house to do a quick reno and you're back in business with a newish looking property. But I often wonder about the pitfalls of choosing units as time goes on given the huge endeavor of ongoing maintenance for a large number of units.
Do you think there is some point at which you should sell?.for eg. once maintenance starts getting very expensive for the entire complex. Or do you think to just keep them until they die and keep taking the rent?
I would be interested in your thoughts
Thought it was the 50/50/50 membership
50 hrs a week, 50 weeks per year, for 50 years.
The Libs are moving to increase retirement to 70 now & if you include traveling times for 40 hours of work it easily extends to 50 hours. Give the politicians time and it will also extend to 50 weeks per year just like good ol' uncle Sam.
So 50/50/50 is just a matter of time.
IMO it really depends on one's investment/exit strategy. Our strategy, no.
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Yes, this trend of townhouses and villa's and large apartments well located closer to urban centers is a growing trend and not just in Sydney. Sydney is historically at the front of the pack, and the other cities usually follow the trends that Sydney sets. This has generally been the case historically.
Whats driving the trend towards townhouses/villa's/select apartments as an asset class [ apart from interest rates, which equally applies to all RE borrowings], is the changing demographics , location, convenience, and affordability factors.
My tip would be to research what the future population will look like, say in 20 years time, and purchase smart today so that you will be ideally poised in the demand-supply equation when 20 years comes up.
What are your thoughts guys on new vs old villas!
I have always thought if you are buying new your buying an asset that has the majority of its value that is only going to depreciate as time goes on. and in the case of villas the land component is smaller so that lose, over time is only enhanced!
Always been interested in older style duplex/villas that have renovation potential however, as the value lose from depreciation has largely already occurred??
Interested in opinions?
Regards
I have always thought if you are buying new your buying an asset that has the majority of its value that is only going to depreciate as time goes on. and in the case of villas the land component is smaller so that lose, over time is only enhanced!
Always been interested in older style duplex/villas that have renovation potential however, as the value lose from depreciation has largely already occurred??
Interested in opinions?
Regards
i would agree with you on this and i believe Rixter will too, from his previous posts he's targeting the demographics of people who will retire between now and 20 years time i.e. the baby boomers. John Lindeman and Michael Yardney have also written about this group of people who will want smaller dwellings in sea change or tree change locations that are not too far from major capital cities.
I have found this works fine if you are looking for short to medium term capital growth so as to leverage against and build your portfolio faster.
Rixter, I was just wondering whether you have experienced issues with build quality with your villas and townhouses?
I heard the build quality is getting lower & lower, and with small developments of villas and townhouses they can contribute towards higher maintenance costs (though I guess some can be passed off to strata).
Is this more of a generalisation? What has your experience been? Thanks in advance!!!
I heard the build quality is getting lower & lower, and with small developments of villas and townhouses they can contribute towards higher maintenance costs (though I guess some can be passed off to strata).
Is this more of a generalisation? What has your experience been? Thanks in advance!!!
There is risks in all dwelling types and it's up to the individual to conduct their own due diligence in relation to what ever it is they are looking to purchase.
One tool at your disposal for minimising potential building quality risks is to utilise the services of an experienced buildings inspector prior to your offer/contract going unconditional.
You are correct though, the buildings component is a BC responsibility, however I personally would rather pass up a potential purchase where a buildings inspection uncovers a major issue and continue looking for other property, than carry on through to settlement and bring the issue to the BC's attention for rectification.
I hope this helps.
All I can say is that at the moment I am renting a 1 year old townhouse. Not sure who built it but the quality is absolutely terrible. Short cuts taken every where and overall just a rough job. For a new place I would have thought the investor would have taken a close eye on the build and not just hand over cash for a poor build. The design, the finishes, the problems are just terrible.
Here is a list off the top of my head.
1. Some large cracks in walls especially corners visible plaster joins
2. Carpet that is laid has tacks coming through it so if you step on this area it will go through your foot.
3. Power outlets wobbly and loose.
4. Interior door handles used on exterior door (rusty and pitted)
5. Sliding door upstairs when windy and the rain is blowing into it floods the carpet.
6. When moving upstairs you can hear very big vibrations and cracking downstairs.
7. Showers allow lots of water spray onto the outside. The whole floor area is wet next to the shower. Must be terrible seals or design.
8. Living room does not have a wall without a window. Bloody fantastic if you want to put up a cabinet. Just down right poor design.
9. Ducted heating uneven pressure. Downstairs is cool and upstairs is a sauna. Flimsy vents falling apart.
10. Timber floor in living room has lots of knots/rot in it. Pieces just start falling out and you have nice holes in the flooring.
11. Water pressure terrible if 2 taps turned on.
12. Blinds are just some cheap junk.
13. Fence is already falling apart. The brick pillars are not capped on the top. Looks like crap.
14. Kitchen is terrible, the dishware power cable runs out one of the bottom cabinet doors (so you can't close it) and runs into another one (can't fully close that either) and finally into a power socket. Awesome design and thoroughly thought out. Why not have a power outlet near the dishwasher to run power cable inside the cabinets. Guess they did not want to drill holes.
15. Appliances brand Damani are terrible. Dishwasher does not clean. Oven only works at 250deg C. Kitchen itself is cheap rubbish.
16. The tiling around the bottom of the walls on tiled areas has not been finished off on top. So you can see the glue from the top looking behind the tile. Just looks like a rushed job.
To think they would be asking 500k+ for this property is a joke.
Can someone explain to me what does 2.5 bathrooms mean? Not sure what the .5 classifies as?
I would imagine build quality varies from builder to builder.
Most of these things I have mentioned to the labdlord because it is still under warranty. But I don't think they care, just amazed I am.
Otherwise known as powder room.
Yes great point Alex.. Another reason for me not purchasing OTP. Prefer near new for risk minimisation.
Oh I get it. So in my example upstairs has a bath,shower,toilet and basin. One door.
Downstairs we have a toilet (own door) shower and basin. One door leads to it from the living room and another door from the garage. So this must be the 1.5.
They also classify this as a 3 bedroom. But only 2 bedrooms have a door. The other looks like a nook/study just an area upstairs with no door. So really it is a 2 bedroom as a bedroom needs to have a door correct?
Downstairs we have a toilet (own door) shower and basin. One door leads to it from the living room and another door from the garage. So this must be the 1.5.
They also classify this as a 3 bedroom. But only 2 bedrooms have a door. The other looks like a nook/study just an area upstairs with no door. So really it is a 2 bedroom as a bedroom needs to have a door correct?
Hi Rixter
I am only new to the forum and found your posts re Villas very interesting.
Our approach is to purchase Villas in a very nice part of Sydney. In this general area they are not building too many of them anymore. We see them as a great compromise between a house and a unit with the expectation that as the city grows they will become more valuable.
The specific strategy is that they are in an area where properties are very expensive and are generally inhabited by older people. We feel that when an older persons sells their home for >$2mil they may still want to stay in the area (near services, parks, water, etc) and will see the villa as a great compromise.
I think that our properties are a reasonable size for villas in this area, ie, approx 201 & 297 sq mtrs but are not large as properties go. Having held them for a number of years, ie, 1998 & 2009 the values are looking reasonably healthy. One is fully owned and the other at about 40% LVR. We are looking for another one but the prices are getting a bit too ritzy. Looking for a pull-back and maybe open the purse strings - however, pull back not looking likely soon.
All the best
I am only new to the forum and found your posts re Villas very interesting.
Our approach is to purchase Villas in a very nice part of Sydney. In this general area they are not building too many of them anymore. We see them as a great compromise between a house and a unit with the expectation that as the city grows they will become more valuable.
The specific strategy is that they are in an area where properties are very expensive and are generally inhabited by older people. We feel that when an older persons sells their home for >$2mil they may still want to stay in the area (near services, parks, water, etc) and will see the villa as a great compromise.
I think that our properties are a reasonable size for villas in this area, ie, approx 201 & 297 sq mtrs but are not large as properties go. Having held them for a number of years, ie, 1998 & 2009 the values are looking reasonably healthy. One is fully owned and the other at about 40% LVR. We are looking for another one but the prices are getting a bit too ritzy. Looking for a pull-back and maybe open the purse strings - however, pull back not looking likely soon.
All the best
I have a otp townhouse and a new/established villa (IPs) as well and reason are the same as Rixters, plus I like the fact that new properties come with warranties and generally more modern, better designs, provided your builder is reputable. Another advantage is you get to customise your floor plans with some developers / builders which can boost the value of your property without you having to fork out extra (ie. adding an extra toilet/bathroom). I personally have heard lots of horror stories of people spending big bucks on inspections and purchase cost on older established properties only to find termites, defects etc.. leading to drawn out legal battles and loads of money spent. Defects in new properties are also looked at and fixed by the builder for 7 years, its up to the landlord to chase up, and personally I would only buy from reputable builders as they are more likely to still be around 6 years later when you need them to fix something. Big structural issues would usually crop up in the first couple of years, and faulty appliances etc are usually replaced for a new one. Its up to the purchaser to do their due diligence on the quality of the product they are buying, and as an investor I always go middle of the road and would not splash on top quality appliances, fittings and finishes.
You're saying buying OTP has the advantage of avoiding drawn out legal battles?
I would have said the opposite.
That's not what I am implying. I was merely stating the fact that from what I have heard older properties can have the same rare but dreaded issues that property owners fear, and its in my opinion that new/newer properties give you that extra security blanket of a 7 year warranty which can be used to your advantage and I personally have already utilised the warranty on my own PPOR for over a dozen small non-structural items which would have cost me thousands of dollars to rectify, and I got no arguments from the builder. Whereas in older properties you really have no leg to stand on apart from the property inspection report and in some instances people just have to accept it and get what they paid for.
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I've seen quite a bit of chat about never buying townhouses that have swimming pools or gyms because bc fees are high.
Is it fair to say that THs with high BC fees also tend to cost significantly less thus resulting in a 'zero sum game' when total major expenses (mortgage+bc) are added up and compared to other THs ?
Is it fair to say that THs with high BC fees also tend to cost significantly less thus resulting in a 'zero sum game' when total major expenses (mortgage+bc) are added up and compared to other THs ?
